Is the double dip coming?

[Gone4Good]

I agree it IS far better than it was. I just don't think it's anything to cheer about. In another post I wrote we apparently need 100,000 jobs just to stay even. During the bubbles we were making 200,000 jobs or so. If we have a robust recovery bordering on a bubble we net positive 100,00

I am certainly cheering that we are not loosing 700,000 jobs a month anymore.

Exactly what Zathras said.

Originally when stocks turned up the pessimists said "look around, things are horrible. Stock PE's are through the roof and we don't know where "E" is going." When earnings came in better than expected the pessimists said "It's all cost cutting, you can't cut your way to prosperity". Then revenues started to grow. And we heard the pessimists say "But where are the jobs. We can't have a recovery without jobs". Now we have some job growth and the pessimists say "But we're not adding enough jobs"

Not everything is perfect. But once everything is perfect, about 75% of the expansion will be over.

During the bubbles we were making 200,000 jobs or so. If we have a robust recovery bordering on a bubble we net positive 100,000 jobs a month. 84 months needed to get back were we were before we lost 8.4 million jobs.

I don't agree with this at all. There is a huge difference between trying to add jobs when the economy is already at full employment and when there is tremendous slack in the labor force.

 

[Zathras]

When we were losing 700K a month, you should've been cheering we weren't losing 900K.

I would have, if we had been loosing 900k previously.
Likewise, will you not be cheering when we add 3 Million jobs because it isn't 5 Million?

 

[audreyh1]

Doesn't a high oil price lead an economic downturn?

Yes, that's what I meant. High oil prices tend to act as a drag on the economy - slowing it down. Negative feedback loop, ya know.

Audrey

 

[Steve O]

Kind of ironic every time there's a big Treasury auction they break out the Grease

Im looking for the FED to say their gonna keep rates low today...

Earnings will keep coming in good...

Hopefully employment will pick up soon...

If it doesn't they might need a war to keep this Ponzi going

 

[IndependentlyPoor]

Yucky-poo!

From
Calculated Risk: Fannie Mae: $11.5 billion loss, sees no profits for "indefinite future"

 

[kcowan]

I wonder where this graph will end up. It might be prematurely made to go horizontal when the FDIC runs out of money? But then what will happen to the banks needing help?

 

[FinanceDude]

Yucky-poo!

From
Calculated Risk: Fannie Mae: $11.5 billion loss, sees no profits for "indefinite future"

Two waya to look at this graph:

1)Pessimist: 5 times MORE people are defaulting on their mortgages than two years ago!

2)Optimist: Delinquencies have increased form 1% to 5.5%, but that still means 94.5% of homeowners are NOT delinquent on their mortgages......

See how statistics are misleading?

 

[FIREd]

Two waya to look at this graph:

1)Pessimist: 5 times MORE people are defaulting on their mortgages than two years ago!

2)Optimist: Delinquencies have increased form 1% to 5.5%, but that still means 94.5% of homeowners are NOT delinquent on their mortgages......

See how statistics are misleading?

or 3) another optimist's view: it looks like delinquencies have increased at a slightly slower rate since the beginning of the year which could signal that we are reaching a top. It makes sense since the job market seems to have reached a bottom.

 

[IndependentlyPoor]

Two waya to look at this graph:

1)Pessimist: 5 times MORE people are defaulting on their mortgages than two years ago!

2)Optimist: Delinquencies have increased form 1% to 5.5%, but that still means 94.5% of homeowners are NOT delinquent on their mortgages......

See how statistics are misleading?

Not to be snarky, but this is more than just statistics.

If Fannie Mae figured their interest rates and profit margin based on the historic delinquency rate (and I am convinced they did), and that rate quintuples (and it did) then they are going to go broke (and they are).

 

[FinanceDude]

Not to be snarky, but this is more than just statistics.

If Fannie Mae figured their interest rates and profit margin based on the historic delinquency rate (and I am convinced they did), and that rate quintuples (and it did) then they are going to go broke (and they are).

Don't you find the coincidence of Fannie Mae asking for more bailout funds and this "troubling graph" a little handy?

Bottom line, Fannie and Freddie have been held to zero accountability, ZERO!! Compared to what GM and Chrysler had to go through, they have suffered NO pain in getting mucho govt slush funding.............

 

[IndependentlyPoor]

Don't you find the coincidence of Fannie Mae asking for more bailout funds and this "troubling graph" a little handy?

Bottom line, Fannie and Freddie have been held to zero accountability, ZERO!! Compared to what GM and Chrysler had to go through, they have suffered NO pain in getting mucho govt slush funding.............

All true.

Perhaps I am just gullible, but to me, that graph looks like a pretty good explanation of why Fannie and Freddie are in trouble. However, it doesn't excuse them from any of the criticisms you have levied, or make any argument that Uncle Sam's bailout was the correct thing to do.

 

[Gone4Good]

Don't you find the coincidence of Fannie Mae asking for more bailout funds and this "troubling graph" a little handy?

Bottom line, Fannie and Freddie have been held to zero accountability, ZERO!! Compared to what GM and Chrysler had to go through, they have suffered NO pain in getting mucho govt slush funding.............

The difference being that Fannie and Freddie sold debt with a wink and a nod from Uncle Sam that their obligations would be backed by the government. Uncle Sam is now making good on that wink and nod, as I think it has to.

Part of the delinquency story here is that Fannie & Freddie are now being run as a housing market subsidy machine instead of as a business. I think it will be impossible to tell how bad the book of business would have been had the companies just wound down. Whatever the losses would have been, they're going to be worse because of government intervention.

 

[IndependentlyPoor]

The difference being that Fannie and Freddie sold debt with a wink and a nod from Uncle Sam that their obligations would be backed by the government. Uncle Sam is now making good on that wink and nod, as I think it has to.

Part of the delinquency story here is that Fannie & Freddie are now being run as a housing market subsidy machine instead of as a business. I think it will be impossible to tell how bad the book of business would have been had the companies just wound down. Whatever the losses would have been, they're going to be worse because of government intervention.

Agreed.

Weren't Fannie and Freddie always intended to subsidize the housing market? The implicit government backing allowed them to borrow at artificially low rates.

In some ways, it worked. Almost all of us benefited from those government backed mortgages, either directly, or through our parents. OTOH, the final result (though not entirely Fannie and Freddie's fault) was ugly.

I am not a small government idealist, nor a believer in big government, but one thing that I am always suspicious of is private/public partnerships. The public almost always gets screwed. I prefer government intervention to be clear and separate from business interests.

 

[ziggy29]

I am not a small government idealist, nor a believer in big government, but one thing that I am always suspicious of is private/public partnerships. The public almost always gets screwed.

Also known as "privatize the gains, socialize the losses...."

 

[IndependentlyPoor]

 

[Gone4Good]

Weren't Fannie and Freddie always intended to subsidize the housing market? The implicit government backing allowed them to borrow at artificially low rates.

Yup. But presumably in the past those artificially low rates were the extent of the subsidy. Now I think it extends to either making questionable loans or doing other things that a private company wouldn't do.

 

[IndependentlyPoor]

And now I see this
backdoor bank bailout fannie and freddie may be "losing money as a matter of policy": Tech Ticker, Yahoo! Finance

 

[Gone4Good]

And now I see this
backdoor bank bailout fannie and freddie may be "losing money as a matter of policy": Tech Ticker, Yahoo! Finance

That's what I meant by this . . .

Now I think it extends to either making questionable loans or doing other things that a private company wouldn't do.

 

[IndependentlyPoor]

It was the backdoor bailout part that grossed me out. That is different from merely supporting the housing market. This may be conspiracy theory on the part of Ritholtz and Baker, but using the GSEs and supporting the housing market as a cover for funneling yet more billions into the big banks is pretty ugly.

 

[IndependentlyPoor]

Good news?

 

[HFWR]

Also known as "privatize the gains, socialize the losses...."

To varying degrees, just about everyone has been holding their noses over these "bailouts". But I think deflation was such a bogeyman that everyone in positions of power was scared shiteless... Though it's an attractive "idea" to let the chips fall where they may, I wonder just how bad it could have gotten, or may still get. I'm not confident this course is better, but if you think 10% unemployment is bad, wait until you get 40-50%...

 

[IndependentlyPoor]

Bad news? Has the recovery stalled?

 

[Running_Man]

To varying degrees, just about everyone has been holding their noses over these "bailouts". But I think deflation was such a bogeyman that everyone in positions of power was scared shiteless... Though it's an attractive "idea" to let the chips fall where they may, I wonder just how bad it could have gotten, or may still get. I'm not confident this course is better, but if you think 10% unemployment is bad, wait until you get 40-50%...

The idea that these bailouts could prevent debt implosion has just nationalized the problems, the US government is not capable of backing the amount of paper necessary to prevent the deflation. Fannie and Freddie are the tip of a very large iceberg the FED has purchased.

 

[Gone4Good]

Bad news? Has the recovery stalled?

It seems like we're getting closer to "stall speed". Financial conditions have worsened a lot in the past few weeks, with a bunch of credit market indicators flashing yellow. I think we're carrying enough momentum to get us through this rough patch, though.

 

[kcowan]

Wasn't the jobless stats helped by the 48000 census takers?